GENERAL LITIGATION – ARBITRATION

Arbitration Not Waived Even Though Defendant Waited Until After Scheduled Trial to Enforce the Arbitration Clause

In Delam Construction Corp. v. 15 Thornton Road, L.L.C., New Jersey Superior Ct., App. Div., No. A-0582-06T1, an unpublished opinion, plaintiff Delam Construction Corp. (“Delam”) sued the defendant, 15 Thornton Road, L.L.C. (“Thornton”) for money due on a standard AIA construction contract, which contained an arbitration clause. The parties went through discovery and motion practice for about a year. After the original trial date was adjourned, defendant obtained new counsel who made the first attempt to dismiss the lawsuit and enforce the arbitration clause. A motion was filed seeking to dismiss plaintiff’s complaint on the basis that the parties were contractually bound to arbitrate their dispute. The trial court decided that the matter would be submitted to arbitration at the late date citing Wasserstein v. Guild Contracting Corp., 261 N.J. Super. 277 (App. Div. 1993) which held that a court can order arbitration any time before judgment is entered. Plaintiff appealed.

On appeal, Plaintiff argued that Defendant’s “belated attempt to invoke the arbitration provision, after more than a year of litigation, should have been denied because Thornton waived such protections through its voluntary participation in the Superior Court action.” Plaintiff alleged it was prejudiced by expending considerable amounts of time and money in the prosecution of the claim. Defendant argued that Plaintiff breached the express provisions of the contract regarding arbitration and contended that court must enforce the contract as written.

The appellate court acknowledged there were two competing lines of authority. On one hand, courts favor commercial arbitration as a speedy and inexpensive alternative to the litigation in the courts, particularly for resolution of construction contract disputes. On the other hand, in a recent case, Wein v. Morris, 388 N.J. Super. 640 (App. Div. 2006), cert. granted, 190 N.J. 254, (2007), the appellate court stated that “the active and prolonged litigation of disputes [subject to arbitration agreements] in the trial court will require a finding of the waiver of the right to compel arbitration.” The Court acknowledged that under some factual circumstances it may be difficult to determine when waiver has occurred.

The Court held that in the instant case, the issue was close and neither party was blameless; however, it rejected plaintiff's contentions that it had suffered prejudice and that defendant waived the arbitration protections by not asserting arbitration as an affirmative defense and through its voluntary participation in the Superior Court action for over a year. The Appellate Court accepted the trial court’s reasoning that “plaintiff instituted the action with the arbitration clause in the contract clause in the contract, so if we’re going to presume that the defendant knew about the arbitration clause, we have to presume that the plaintiff knew about the arbitration clause.”

EMPLOYMENT LITIGATION

An Employee Need Not Give His Employer A Formal Written Request For Anticipated FMLA Leave; Simple Verbal Notification Is Sufficient.

Plaintiff was hired by Air Brook, in July 2001, as a service manager with responsibilities that included the maintenance of Air Brook's vehicles. Sarnowski's initial performance evaluations were very good. In June 2002, he received a favorable review and a salary increase.

Plaintiff suffers from Coronary Artery Disease and an abnormal electrical communication in the heart which causes episodes of rapid heart rate. In October 2002, Sarnowski underwent quintuple coronary artery bypass surgery. He was hospitalized for about one week and remained out of work for approximately a month and a half.

In December 2002, Sarnowski received a written warning regarding performance issues. He was told that, although his performance had been excellent at first, it had reached unacceptable levels in the weeks leading up to and following his hospitalization and leave. Sarnowski was urged to improve his performance and to speak with his supervisors regarding any problems he might be having.

On April 7, 2003, a coronary angiogram revealed four more blocked arteries. Sarnowski's doctors advised him that he would need to wear a heart monitor for thirty days and that, depending on the results, he might need further heart surgery. Sarnowski advised his immediate supervisor of his medical condition and that he might need to take an additional six weeks off for further heart surgery. Ultimately, the heart monitor did reveal that Sarnowski would need further surgery.

Sarnowski was terminated on April 15, 2003 after he claims that he had informed his supervisor of the monitor and of the possible need for further surgery, but before he had learned that the need for surgery was definite. Air Brook maintains that Sarnowski was terminated for performance-related reasons.

Sarnowski claimed that Air Brook interfered with his rights under the FMLA by terminating him after learning that he would need medical monitoring and might need another six weeks off for additional heart surgery. The District Court granted summary judgment against Sarnowski on his FMLA interference claim on the ground that Sarnowski was not entitled to benefits under the FMLA because he did not submit a formal request for leave under Air Brook's FMLA policy.

The Court of Appeals agreed with the District Court that, for Sarnowski to have been entitled to benefits under § 2612(a)(1)(D) for his 2003 heart problems, he must have provided notice to Air Brook of his need for leave. An employee seeking leave under § 2612(a)(1)(D) “shall provide the employer with not less than 30 days' notice, before the date the leave is to begin, of the employee's intention to take leave under such subparagraph, except that if the date of the treatment requires leave to begin in less than 30 days, the employee shall provide such notice as is practicable.” 29 U.S.C. § 2612(e)(2)(B). Sarnowski did not dispute that he was required to provide Air Brook with notice. Rather, the dispute in the appeal is whether the notice Sarnowski did provide was legally sufficient to entitle him to benefits under the FMLA.

The Court noted that [t]he regulations provide some guidance as to what sort of notice is sufficient stating that it is clear that an employee need not give his employer a formal written request for anticipated leave. Simple verbal notification is sufficient: “An employee shall provide at least verbal notice sufficient to make the employer aware that the employee needs FMLA-qualifying leave, and the anticipated timing and duration of the leave. The employee need not expressly assert rights under the FMLA or even mention the FMLA....” 29 C.F.R. § 825.302(c). See also Manuel v. Westlake Polymers Corp., 66 F.3d 758, 764 (5th Cir.1995). The issue is whether the employee has “state[d] a qualifying reason for the needed leave.” 29 C.F.R. § 825.208(a)(2). Moreover, the regulations are clear that employees may provide FMLA qualifying notice before knowing the exact dates or duration of the leave they will take. . . . Additionally, the 30-day statutory notice requirement is designed to be flexible, and an employee is not required to give greater notice than is “practicable”.29 U.S.C. § 2612(e)(2)(B).

The Court held that:

In providing notice, the employee need not use any magic words. The critical question is how the information conveyed to the employer is reasonably interpreted. An employee who does not cite to the FMLA or provide the exact dates or duration of the leave requested nonetheless may have provided his employer with reasonably adequate information under the circumstances to understand that the employee seeks leave under the FMLA.

The Court concluded that based on the factual record as related by Sarnowski, Air Brook had sufficient notice of Sarnowski's need for leave to satisfy the notice requirements of the FMLA. The Court noted that “[e]ven if it is ultimately determined that Sarnowski gave legally sufficient notice, he will not prevail on his interference claim if Air Brook can establish that it terminated Sarnowski for a reason unrelated to his intention to exercise his rights under the FMLA.”